IEA (2021), System Integration of Renewables in Moldova: A Roadmap, IEA, Paris https://www.iea.org/reports/system-integration-of-renewables-in-moldova-a-roadmap, Licence: CC BY 4.0
The electricity system in Moldova is characterised by its reliance on imports. In 2020, of its 4.4 TWh of electricity demand, 81% was supplied by imports, either from Ukraine (4%) or from the Cuciurgani-Moldavskaya GRES (MGRES) gas-fired power plant (77%) located in the breakaway region of Transnistria. This is roughly the same share of imports as 2019, although there was a significant decrease in imports from Ukraine in 2020 relative to 2019, with only 26% of the traded volume (167 GWh vs. 644 GWh) which was largely compensated by an increase in imports from MGRES. The balance of domestic supply comes from a combination of CHP plants (~ 330 MW) and small renewable energy plants (72.9 MW), with the share of RE generation as of December 2020 detailed below.
Moreover, the country is completely reliant on imports for natural gas and all oil products, which fuel the majority of its domestic supply in the form of CHP plants (~330 MW). This includes an almost 100% reliance on gas imports from Russia, although recent efforts have been made to diversify Moldova’s gas supply by interconnecting with Romania in addition to modifications on the gas network of the trans-Balkan Corridor, on which Moldova is a transit country, to allow reverse flows.
Electricity grid and interconnections
Moldova’s electricity grid was predominantly built in the time of the Soviet Union, making it relatively old and inefficient. It is synchronously interconnected with Ukraine’s Integrated Power System (IPS) and, in turn, Russia’s Unified Power System (UPS) in the northern and south-eastern parts of the grid. While there are transmission lines connecting Moldova’s electricity to Romania, the grid cannot operate synchronously with Romania’s electricity system, which is part of ENTSO-E's Continental Europe Synchronous Area and has stricter regulations for the technical operation of its network. Hence, with ENTSO-E it is limited to operation in island mode, allowing only very small amounts of trade. In order to interconnect synchronously with Continental Europe Synchronous Area via Romania, significant effort would be required in terms of rehabilitation and modernisation of generators, lines and substations, which are relatively old and inefficient, falling short of ENTSO-E technical requirements. Rehabilitation of the network is ongoing, supported mainly by international financial institutions such as the World Bank (WB), European Bank for Reconstruction and Development (EBRD) and European Investment Bank (EIB). Furthermore, the current electricity system is based on Russian technical standards (GOST), with all employees in the electricity sector used to these standards. On the other hand, ENTSO-E uses International Electrotechnical Commission (IEC) standards, which represent a large barrier for Moldovan electricity companies to overcome as they would therefore need to convert to IEC standards in order to operate synchronously.
Prior to the synchronous interconnection with Continental Europe, Moldova aims to connect asynchronously with Romania via High-Voltage Direct Current (HVDC) back-to-back converters, with a memorandum of understanding (MoU) concluded between the two countries in 2015 on five key projects for interconnecting both their electricity and gas systems. It included three projects for asynchronous connection of the electricity networks in the north, central and southern parts of Moldova. The asynchronous interconnection in the southern part (Isaccea – Vulcanesti – Chisinau) has started and will consist of the construction of a new 400 kV power line from Vulcanesti to Chisinau and a back-to-back substation of 600 MW in Vulcanesti. The financing for the project has been agreed through an EU grant of 40 million Euros and loans from EBRD, EIB and the WB.
The wholesale electricity market, in its current shape without a spot market, is based on a number of bilateral contracts between transmission and distribution companies, generators, and power suppliers (traders). In its current state, it suffers from a lack of competition, and is mainly limited to imports from Ukraine or the Moldavskaya GRES (MGRES) plant situated in Transnistria, which together supplied around 81% of electricity demand in 2019 and 2020. The imports from Ukraine and Transnistria are concluded on an annual basis through a tendering procedure. The Law on Electricity (Law No. 107 of 27.05.2016) will ensure the liberalisation of the electricity market. The design for the operation of the new wholesale electricity market and the detailed wholesale electricity market rules were approved in August 2020 and will entered into force on 2 October 2021.
The total electricity consumption in Moldova was 3.8 TWh in 2020, which was up 10% from its level in 2010, with the majority of consumption from the residential sector (45%). Residential consumption grew by 14% between 2010 and 2020, which is considerably less than the global average growth for the same period, which was over 20%. While Covid-19 had a significant impact on electricity demand patterns in Moldova in 2020, with an increase in residential consumption and decline in services consumption, the overall change in demand (0.38% decline year-on-year between 2019 and 2020) was relatively small.
As part of the Energy Community, Moldova had a binding 10% contribution target for renewable sources (from either electricity, biofuels or hydrogen) in its transport sector by 2020. This target was not met. However, the Energy Community has also started to consider the implementation of a revised Renewable Energy Directive (RED II) on the promotion of energy from renewable sources. If fully transposed into Moldovan law, this would set a target of 9% of renewable sources in the transport sector in Moldova by 2030. A study conducted for the Energy Community estimates that this target would be met mostly by biofuels (8.8%), while a combination of battery electric vehicles (BEVs) and hydrogen fuel cell-electric vehicles (HFCEVs) would be required to meet the rest of this target (Energy Community, 2020). Electric vehicles (EVs) could therefore play a growing role in future electricity demand.
Electricity demand in Moldova is characterised by a winter peak demand. The typical load variation in the winter season, based on 2019 operational data is between a minimum base load of 540 MW and a maximum peak load of 950 MW, while in the summer, it varies from a minimum of 480 MW and a peak load of 800 MW. Therefore, the demand typically almost doubles between peak and off-peak periods in both winter and summer, with a fairly flat demand during the day.
In the winter, the cogeneration units in Chisinau and Balti are operated as must-run due to heating demand, and therefore account for between 200 and 260 MW of generation during these periods. The monthly supply of power in terms of domestic production and imports from MGRES and Ukraine is shown in the figure below and shows a strong seasonal pattern peaking in January and accompanied by an increase in domestic production from CHPs.
According to an analysis of technical potential for RE generation (IRENA, 2019), there is in excess of 27 GW of potential renewable generation capacity in Moldova, including 20.9 GW and 4.6 GW of wind and solar potential respectively, in addition to both biomass and hydro potential.
Despite the large potential for wind and solar power, its deployment has been very modest to date, with only 72.9 MW of installed capacity at the end of December 2020. However, there are high expectations set upon the further implementation of the Law on the Promotion of the Use of Energy from Renewable Sources, which was adopted in 2016. The law provides support mechanisms for the development of RE plants at three separate levels according to the size of the project and aims to help achieve the targets set in the National Energy Strategy which stipulates that 10% of electricity generation should be provided by RE generation by 2020. In 2020, RE (including wind, solar PV, hydro and biogas) accounted for just over 13% of domestic generation, which excludes generation in Transnistria.
The support mechanisms for these new plants are offered at three different levels according to the project size: net metering for plants up to 200 kW, administratively-set FiTs for small-scale projects and auctioned fixed prices for larger projects. The central electricity supplier, Energocom, has an obligation to purchase all eligible renewable-generated electricity for 15 years at a determined tariff/price. Eligible producers also benefit from non-discriminatory grid connection and priority dispatch. By the end of 2020, 5.2 MW of solar PV and 45.1 MW of wind had been procured through either FiTs or competitive auction, in addition to at least an additional 35-40 MW (as of the end of 2019) which is supported under a net metering scheme. However, the MoIRD is currently exploring the amendment of these aforementioned categories of RE and their respective capacity limits, with the decision currently under public consultation, as the government aims to increase the capacity of RE (including a large portion of variable renewables) that are procured as eligible producers.
The pool of eligible producers which currently benefits from the aforementioned support mechanisms, comes from a larger pool of more than 1.2 GW of renewable plants which have connection permits to the grid (Moldelectrica, 2021b) . Those plants that do not qualify for support mechanisms do not have priority dispatch but can still implement projects under normal market conditions.